The industrial world is confronting the environmental side of sustainability. But, how do you evaluate the incentives - either from society or government- to convince them about sustainability benefits and its potential for long-term profitability?
Of course, now, there are varying levels of factors (taxes, policies, grants, credits, markets, niche, carbon accounting...) that affect the bottom line. But for most businesses, they won't do it unless it has a business model with a clear pay-back, over a known time period.
Of course, now, there are varying levels of factors (taxes, policies, grants, credits, markets, niche, carbon accounting...) that affect the bottom line. But for most businesses, they won't do it unless it has a business model with a clear pay-back, over a known time period.
Long-term profitability comes from reacting to demand from stakeholders. Via sustainable practices, companies can better meet the needs of environmentally-conscious customers. It will, therefore, enhance the goodwill and competitive position of the company. In addition, this will draw the attention of various suppliers who are keen to work with companies that have an environmental management system in place. In this way, the organization can benefit from extended credit terms and long-term relationships with key suppliers.
The incorporation of CSR activities into the corporate business environment and culture has increased its relevance and use as a strategic tool for creating a positive image of the firm by bringing a favorable social change benefiting the multiple stakeholders. The increasing need for integrating the SDGs with the corporate business practices also have become a matter of priority for businesses, so that their social and environmental responsibilities are validated and justified. In this context, the most influential factors that can reflect the responsibilities of businesses towards practising environmental sustainability may include: (a) voluntary and mandated sustainability reportings and the content of activities and the financial commitments fulfilled; (b) the consistency in the achievements in emission reductions (foot print reductions); the societal and environmental impacts captured through contributions towards the SDGs most relevant to the business operations.
Vision of a Government and vision of a business leader, main as well as interaction effect between the two, has the power to motivate firms to practice environmental sustainability. Government helps by creating a policy framework and able leaders folds that policy into making a compelling sustainable business model.
Good question. In other words, how to persuade companies that pollute the environment, power plants emitting greenhouse gases, banks to credit pro-ecological projects, politicians to create normative solutions that will significantly accelerate the processes of implementing sustainable development principles into business operations? In the current reality, the key issue is the widest possible publication of research results presenting the accelerating global warming process and the risks associated with climate disasters, which will increase in the coming years.
The majority of 'environmental' measures focus on making existing or proposed processes as efficient and effective as possible rather than examining the 'want' or 'need' for the process. The starkest example on the most profound level is child birth, from personal memory, in the 1960's there was a slogan in the UK 'two will do' with regard to children. Now there are circa 8 billion humans on the planet adoption of the 'two will do' motto as a principal while below the commonly accepted replacement level, 2.1, will curb the curse of overpopulation while ensuring propagation of the species. The usual caveats of adequate health care and sufficient equality of resource distribution and use apply.
It has been said earlier by Sherif Goubran: "pay them". What is fascinating is why we don't! Around each corporation is an eco-system of conflicting rules of the game, imagined rules, laws and expectations. The corporations operate in this environment we all call business as usual. In order to really understand it you need to take helicopter view and see how the world works. Not many have the opportunity to take that step backwards but a recent study has been convened to do just that. I write about the study here. https://stephenhinton.org/2020/04/21/covid-19-the-disconnects-exposed-and-good-things-to-keep/ Like all system analysis you see that the system is robust, and resists change. However, all systems have two or three intervention points that if you take those you change the whole system. SO: WHAT ARE THOSE POINTS?????
The economic factor and the political interests is what moves everything. If it is possible to unify these two factors in a sustainability project, then the project will be carried out, it is sad but it is the nowadays reality, this would be the first start. As soon as other companies and governments realize that sustainability is profitable, then they will enter the game and it will become global actions. We just have to find and promote who will be the first company to start this cycle.
The fashion industry is one of the most polluting on the planet, luxury fashion is only part of the fashion industry, but it is already a step if these companies start to become aware of the environment, although the worst part of the fashion industry is the "fast fashion". Fast fashion generates enormous waste and pollution and must be fought more deeply. Society must be more demanding with sustainability and labor abuses behind this industry. I think that we, as researchers, can contribute by spreading these facts. Society and companies will arrive at any time (thanks to our continued pressure to spread the pollution problems that this type of industry generates) to the conclusion that they will have to take part and acting accordingly, some manufacturing sustainable products "Eco-fashion" and others consuming only sustainable products and extending their life cycle. The culture of cheap and throwaway is coming to an end. We have only one planet and it is our duty to take care of it.
Dear colleagues, I couldn't agree more with your statements about the fashion industry. Both the carbon footprint and the water footprint show enormous damage to the environment. Perhaps the current pandemic, terrible as it is, will show us better ways of doing things, now that the supply chains are disrupted and globalization is being questioned. Perhaps a good lesson to learn is to live simpler lives.
The triple bottom line (people, planet, profit) needs to be embraced. Emphasizing short term profits is the big corporation way because they are trying to please shareholders first and there is no concern for people or the planet. This is a source of the greed and lack of investment in R&D. It becomes worse when big business has government in their pocket. The solution? Keep advocating. Start by teaching these values to the next generation ... all they way to business and law school. Legislate these values into public policy. Triple bottom line is a win-win-win.
Globally, there has been increasing concerns now to incorporate the triple bottomline of sustainability into business practices as well, with large companies and corporations taking a lead in the same by way of implementing CSR policies aligning with the sustainable development goals. Let us be optimistic about this paradigm shift already happening, a shift from the conventional business as usual (BAU) perspective of doing business. Nevertheless, the pace at which the shift happening needs to be augmented by broad-basing economic development and business strategies to cover the entire spectrum of human actions, be it large business or small business or anything else than business.
Today the issue is a question of power, and of being able to survive as well. The biotech industry, the upper phase of capitalism, is at risk of dying, the apparently only solution is to create pandemics. Dr. Francis Boyle said so. And this pandemic is a reflection of that.
Thanks for your great contribution to this question. So far, to sum up with your answers, the key influential factors towards making sustainable businesses include shifting from business as usual (BAU) approach, economical factors, political interests, high impact of the fast fashion industry, lack of R&D investments, and the power of capitalism.
I would like to add the power of consumer behaviors and consumption patterns as the end-users of the supply chain which is a cultural issue and relates to individuals' social responsibilities. I think this is not much depending on education level or wealth, but more relevant to people's culture which is being built first within the family and then schools and learning institutions. So apart from all the interesting and true points you mentioned, let's take into account our everyday decisions and start from our own households.
Elmira Naghi Ganji you rightly indicated the power of consumer behaviour as a key factor. Also note that the power of consumer behaviour is also positively influenced by the advertisements and marketing as well as promotional strategies of the companies. So, the decision is with the consumer as to 'whether use a particular product or not', irrespective of the promotional strategies being adopted. It's often said that human beings do not require many of the products that they use on a day-to-day basis. They can live without many of those 'not-so-essential' items!! The way people lived (live) during the world-wide lockdown (due to Covid-19) is an interesting evidence and learning for us, if one wish to take it..
The key driving factor is economic sustainability of the environmental projects. I believe we can get political and social buy in if we can establish real sustainability intensification (economically). Circular Economic based environmental projects would more likely to succeed than just linear Technology centric environmental projects, and should be actively promoted as catalyst for transformation
Here are a few useful actions for all management teams to improve sustainability practices.
1. Align strategy and sustainability: Management needs to make sure that the strategy of the company and the sustainability efforts are aligned. Often we see divergence, which of course makes the sustainability efforts fragile, lacking real commitment and prioritization. There are many good examples. Take Unilever’s “Sustainable Living” which has the ambition to decouple growth and output as well as reduce its resource footprint by focusing on waste reduction, resource efficiency, sustainability innovation and ecological sourcing (like in organic palm oil). Similarly, Toyota is well known for innovation in hybrid engines, but less so for reducing their dependence of rare earth minerals. These minerals were required for hybrid and electric engines. But by developing alternative motor technologies Toyota reduced its import dependence and operational risk, and in doing so reduced its financial risks in case of price increases.
2. Compliance first, then competitive advantage: First and foremost, companies need to address compliance, which often relates to regulations in waste management, pollution and energy efficiency as well as human rights and labour responsibility. Compliance is also an issue that concerns investors.
3. Reactive to proactive: Many of today’s leading companies in sustainability, like Nike, Coca-Cola, Telenor, IKEA, Siemens and Nestlé have stepped up largely as a consequence of a crisis.
4. Quantify, including the business case: All companies struggle with quantifying the return on their sustainability investments. With regards to compliance this is a straight forward issue. With regards to areas of competitive advantage, however, companies need to link sustainability to a business case.
5. Transparency: is a pre-condition for assessing and improving sustainability practices. You cannot judge without transparency, simple as that transparency - builds the idea that an open environment in the company as well as with the community will improve performance. The only way for companies to accomplish transparency is through open communications with all key stakeholders built on high levels of information disclosure, clarity, and accuracy – as well as an openness to recognizing faults and improving practices.
6. Finally – and most importantly – engage the organization broadly: One example of engagement is Salesforce.com which through their “1/1/1” philanthropy program contributes to each employee’s personal ability to engage with environmental organizations and initiatives that support local communities. Another good example is Nespresso, responding to the debate over the sustainability of its capsules, the company has embedded sustainability into the DNA of every part of its business.
Maybe it's a simple answer, but the consumer. All moves around us, more slowly than other things like taxes, or the system pressure, but it's works. If we can modificate our concept about what we prefer to consume: better or cheaper, healthy or fast, and others... A lot of bussineses can change. Maybe the power of social networks are undervalued if you think about that. If you can create a strong movement full of conscious consumers bit a bit many bussineses'll have to change.
An example: if an influencer buys used clothes, the news consumers'll do too, and if you say I dont buy anymore in ______ because the clothes have bad quality, you're doing something.
Like consumer we have to give more importante to our own role.
Maria Camila Sanchez Gonzalez you mentioned a great point. the power of buyers as end-users of the supply chain is very important, especially for non-durable products that we use everyday as well as the non-recycable wastes that we produce. Although, there is a small number of eco-friendly businesses, we still have the option to support and use them.
Elmira Naghi Ganji that's right, we always have the conception that individuality isn't significant, but if all of us change our mind and we do some little things, everything can change. Even the system can't afford not to adapt.
I believe first rank : standards for responsible and environmental impact labelized investments. Sustainable activities are long term securized assets for investors, if they do not cheat on criteria and control projects (monitoring and smart regulations). But some frames have to exist to frame the definition of sustanability and responsibilities, because finacial sphere as nothing to do with technical control. Reason why, organized hypoicrisy drives actual Socially Responsible Investment, which is a fool bargain. But let's make pressure on managers and boards for professionalism ?
The technological solutions, including organizational measures, are not delivering enough results (see Global Resources Outlook, UN 2019 and Global Material Resources Outlook 2060 OCDE). Consumer behaviour in rich countries is changing, but at a slow path for the urgent transformations needed. Taking the Ehrlich and Holdren I= f(P,A,T) function, Blake Alcott (2010) seems to prefer left equation solutions, this means using the rationing (like II World war) and the taxation approaches to maintain human activities within environment boundaries. These caps must be settled by the countries/peoples, attending to the level of development of each different entity, maintaining the assumption that the major efforts must be done by the more affluent (by the way the main direct or indirect polluters). Apparently, it would be a good answer if the countries, regions and big corporations put an end to the mad race of competition for natural resources and power. In this context we could expect the pedagogic effect of the catastrophes to start structural changes. We could hope that these events will be in a way (we already see many consequences) that result in a soft warnings and not in an environmental positive feedback impacts without possible mitigation and/or return. However, as citizens, consumers, workers, mothers, and fathers, we should do our best to change the state of things, keeping in mind that superficial adjustment doesn’t work anymore.
Pedro Saagua Thanks for your informative answer. You rightly mentioned the power of consumers and consumer behaviors. Likewise, I have opened another question related to sustainable consumption especially for non-durable products that we use every day. However, as you mentioned, the power of big corporations is also enormous driving industries and societies towards sustainable manufacturing and consumption.
Well, power of large companies comes from marketing capacities (now AI driven). It is a real job for consumers to select with relevant informations the products that follow a socially and environmentally responsible (social utility and integration of risks) process, or just a progress. Marketing function is a fool bargain with consulers, even inside the companies themselves (product managers are in competition). Awareness to change is not significant enough (not yet) for professionals (managers) to fill their objectives considering shareholders interests with energetics and material efficiency , full cost and complete life cycle considered (ecoconception). A product proposed to day is the result of a trade off between the short term profits driven with assymetric information and the popularized concepts or standards on sustainability; consumers strategy will always follow. The issue is not to buy and become autosufficient to a certain range? This is the perspective for my country (New Caledonia) and perhaps a "cannonic" quasi-model (unreachable) for the whole world?
Sustainable consumption is on an increasing trend, and if many corporations join this trend, it is with the intention of washing the face of their companies. Consumer behavior will be decisive in achieving a sustainable society. The consumer should be more aware of purchasing sustainable products instead of simply buying cheap products that are generally more dangerous for the environment.
Elmira Naghi Ganji ; Ramon Ruiz-Navarro Unfortunately there remain some trends from the past that need to be eliminated in the production of durable goods so that manufacturing becomes more sustainable. I am specifically referring to scheduled obsolescence whereby manufacturing companies seek to consolidate their permanence in their industrial activities.
A part of the solution is to boost long life, repairable-remanufacting, BtoB products on which services can be delivered or developped, renting instead of selling, etc... The effect expected will be to reduce production and increase use and functionnal economy... electricity would be free because the market would be services to maintain autoproducing systems, etc.. For food, probably, demultiplication of small farms and some vertical biosourced and technological protein factories is a part of the future ? etc... our vision of production must move to distributed solutions instead of centralized large units... more flexible, resilient and close to people... ? A revolution of production and making money on volumes instead of value... etc...
Sharing Economy could be as part of the solution? The application and consolidation of the sharing economy model in the consumer goods industry could have social, economic and environmental benefits. Consequently, it is necessary to investigate and deepen more in the identification and analysis of the diverse attitudes of people with a behavior related to the use of virtual networks and platforms in the world of consumer goods. If you finally understand people's attitudes, you can take actions to raise awareness about the benefits of this type of social network and its benefits in terms of sustainability and social, economic and environmental development.
Sharing Economy can make an important contribution and Circular Economy, helping to reduce or eliminate waste, as well. The pandemic has caused an economic disaster with loss of life, destruction of jobs, and of wealth. However, as in the aftermath of the Great Depression, it can be the opportunity to change the economic model making it more environmentally friendly and more sustainable. We need a New Deal.
"Perhaps a good lesson to learn is to live simpler lives." - Surely, but the dominant narrative (consumerism, novelties) makes such choice difficult.
The question is who is really ready to make any change in this regard, or even to speak about facts. For example, I have an impression that electrical vehicles spend a lot of energy (because of many transformations of energy) and produce a lot of pollution (because of the production of batteries). I asked a question about that, but nobody answered. Discourse about pollution deals mostly with the production of nice slogans.
Mario Radovan Certainly leading simpler lives will solve many problems, among them environmental ones and others related to sustainability and to efficient use of resources. Possibly the long confinement periods have allowed many individuals to reflect on changes of behavior. Nevertheless, gradual lifting of confinement restrictions has led many others to business as usual.
Mario Radovan, well I take the opportunity to enlighten on the hudge progress done the last 25 years (no more) on serious multicriteria life cycle analysis of products, processes and services concerning environmental quantitative impacts and economics (externalities). About the electric car see one of the recent study like Article A comparative LCA of an electric vehicle and an internal com...
and you will see what professionals or experts of the question fo sustainable economy can buid to enlighten policy making and citizens awareness. The problem is that internet brings too much information killing information, and people, even researcher are sinked in the infinity of usefull and fake knowledge. Link with the question... teaching business will need in the future a disruptive vision and ideology on what the real economic must integrate after crisis and how to stop extension of crazy financial sphere... Are academic teachers aware on how the business as usual is driven by financial targets more than real economy? Do people realize that enterprise core utility is to organize "knots of contracts" and reduce transaction costs, distribute taxed value to a Nation and the world, reduce risks and hidden invoices, short-termist gains, invest, and integrate responsibility of the community or Society in prices, propose a win-win relationship with costumers and authorities, a positive sum game instead of naive zero sum game, etc... What means teaching business to day when large enterprises are so unfair with people and commons... Business is not large enterprises or trusts, but they are the model in business-schools. Coming from practice is not enough. A business teacher has to find the way to show the art of making business differently... Covid19 event just makes people revisit their fundamental needs and honor. We need new business teachers and the education of managers...? Electric car is good under conditions. But business is cheating everything to preserve advantages of the old age... Sorry, the matter of a new technical question?
Sylvestre Voisin Thank you! I will read a paper. But my question about the clean cars received no answer; hence, I got an impression that people love nice slogans rather than concrete data. When I was a student (long ago), the transformation of energy (electrical - chemical - electrical) was causing notable losses. I hope technology has progressed since that time.
Well, the issue with electric car is to make sure that the performance of the car itself (let's consider that batteries cycle is virtuous in comparison with burning oil) would not be canceled by hidden counter performance to produce upstream energy; I mean conversions to distribute electricity to the car. It is on the complete cycle or process – to move with an electric car – that attention must be focused. The common solution is to have a shared solar power station at home and perhaps on working places and cut with oil, coal, gaz or nuclear power generation. This engineering perspective is missing to most managers, politicians and people chatting on what is good or not for our planet. Engineering and serious performance criteria... hybrid car is still a very good solution as a trade off between systems as they are to day (unperfect) and the future. It might be the same for all businesses, with the perspective to susbstitute unfair technologies for fair, and to reduce production and mass consuming through services and ecoconception around goods in prder to dematerialize (reatively) the economy (par of services in GNP (some countries are up to 70% (not consideirng what they import from dirty countries like China. The world is increasing par fo servoces on goods production and it is a good solution for capitalism... We have to thinl about how to boost drasticly this trend through new business plans and partnership between entterprises and customers... Functionality economics... Happy to share exprience with you
The society needs education at their level to show the effects of not conserving the environment. A Project towards the same should be started that awards some financial gain to the community members who participate in conservation.
Many things can help, but not much. Goubran: "... for most businesses, they won't do it unless it has a business model with a clear pay-back, over a known time period."
One thing can be added to this: corporate business is stronger than politicians, and even more so than international institutions. So, business decides, and for business, profitability matters the most. Pessimism does not help, but unrealistic optimism does not help either. In spite of all speeches and activities, the pollution has been increasing for many years.
Here are the top 5 most important environmental challenges for the environmental sustainability that only those who adopt sustainable behaviors can face.
During my dissertation defense a committee member asked me a similar question. My response.... economic growth is the overriding factor for most companies. During my research I interviewed investors and Chief Sustainable Officers. Most panelist suggested business growth and sustainability were equally important but a business most make money to survive. Future researchers are challenged is to address both requirements.
Thanks Mario Radovan John Wilkerson Wise answers! What both of you said is in line with creating shared value (CSV) concept which indicates a mutual and win-win situation for companies implementing sustainability. This means, not only companies invest in environmental sustainability and serve environmental conservation, but they also need to see the real benefits and profitability.
The key issue is the coordination of processes and appropriate updating of legal norms in the field of implementing the principles of sustainable development, social environmental (ecological) responsibility, pro-ecological reforms of implementing eco-innovations in economic processes, etc. An interventionist environmental policy of the state and co-financing of the implementation of pro-ecological transformation processes from public funds is necessary traditional brown economy to a sustainable green economy / circular economy. I described more broadly the issues of the determinants of the pro-ecological transformation of the traditional brown economy to a sustainable green economy / circular economy in my publication, which I posted in August 2020 on the Research Gate portal. I invite you to research cooperation on this important issue of the principles of sustainable development, social environmental (ecological) responsibility, etc. Best wishes,